Bernanke is directly intervening to fend off a meltdown of the mortgage industry due to banks, via wall street and sub prime and Alt-A lenders, moved $2.5 trillion of questionable mortgage backed securities onto,among others, private and public pension funds. Can you say Bear Stearns?
First time buyers,in recent years, have been pushed to subprime loan originators and lenders, paying interest rates and fees above what a free market would dictate. A great deal for the big buck lenders like Citibank and Credit Suisse that fund some notable subprime lenders, and a great deal for the mortgage writers who make a lucrative living at it, and for the hedge fund managers that ride the edge of disaster with investor money. Bad for everyone else. It’s a hot potato that has started to go supernova.
A well designed IHDA program would level that playing field, not interfere with the market or dictate housing prices; just make it possible that a young family, buying their first starter home, won’t get gouged by excessive rates and fees.
The IHDA, not the village, provides the financing mechanism, and markets the MRB’s, to help first time buyers buy homes. The village has no fiscal responsibility. None. This is a bit of Home Rule gravy that the village can ladle out every year as council sees fit. This year, VCT; next year, whatever the council decides.
There are over 120 3+ bedroom, 1+ bath, single family homes on the market here, priced $325,000 or less, that no one is buying. That means we DO have a housing problem- we have too many starter homes and not enough starter home buyers. At this point, the problem isn’t on the supply side, it’s on the demand side. We need more buyers who can buy DG homes. NOTE: This info was culled from realtor.com, and may include some surrounding or unincorporated areas. Another good reason to have a realtor on the housing ad hoc committee; they could quickly cull that number down to an accurate DG only list.
Take one of those new jobs VCT creates, marry it to a newly hired DG firefighter, and you have a middle income couple looking for a home here, where they work. Potential buyers. With an effective IHDA program eliminating thousands of dollars in hidden and open fees, and offering a market competitive fixed rate loan instead of an interest only time bomb, or a balloon or ARM, if that couple scrimps, and denies themselves some luxuries, they can just barely afford to buy that 3 bedroom 1 bath first home. They can start on raising a family, improving their home as they go, and contributing to the health of our community.
Instead of an hour each way commute, they drive less and save on fuel, and pollute less. They have more time with their children, or fixing up their dream home, or getting involved in the PTA. And on and on. They aren’t flippers looking for a quick kill; they’re looking for a friendly place where they can belong.
Doesn’t that sound just a bit familiar to all of us? Didn’t most of us go through this?
The same market price dynamics still apply. The same realtor commission structure applies. There is still a loan for a house purchased at a price set by the market and nothing else.
What is there to object to?
And another thought…
We haven’t seen the bottom of the housing market yet. The experts say 2-4 more years of pain. That’s good news for middle income housing; prices should continue to drop, and that maybe addresses the problem for us, at least for a while.